After a judge dismissed their 340B drug prescription payment lawsuit, the American Hospital Association (AHA), Association of American Medical Colleges (AAMC), America’s Essential Hospitals, Eastern Maine Healthcare Systems, Henry Ford Health System and Fletcher Hospital, Inc., this week appealed the decision.
Meanwhile, the House Energy & Commerce Committee issued a report on Wednesday offering a series of suggestions to improve oversight of the 340B program. It called 340B a "vital lifeline" for providers but said there should be more transparency for a program they believe has grown out of control.
The report recommends giving more oversight authority to the Health Resources and Services Administration, requiring hospitals to document their savings through the program and considering eligibility metrics other than status as a Disproportionate Share Hospital.
The organizations and health systems filed the lawsuit in November after the CMS’ final rule that lowered payments for 340B, a program that requires drug companies to provide outpatient drugs to certain providers at a reduced cost. Shortly before the new year, U.S. District Judge Rudolph Contreras dismissed the lawsuit because the changes to the federal drug discount program had not taken effect before the suit was filed. Contreras said his decision was based upon the “plaintiffs’ failure to present any concrete claim for reimbursement to the (HHS) secretary for a final decision.”
There's disagreement on Capitol Hill about both the 340B program and the proposed cuts. More than 200 members of the House of Representatives recently sent a letter asking CMS to abandon the cuts. The lawmakers called the changes a "misguided policy" that will lead to hospitals not being able "to offer necessary services to vulnerable patients and their communities, especially low-income individuals and rural communities."
However, Republican members of Congress are concerned about the program's growth rate and lack of transparency, accountability and reporting. The House Energy & Commerce Commission tackled those issues in its recommendations.
About half of U.S. hospitals are 340B providers. Hospitals affected by the 340B change will be paid for most drugs 22.5% less than the average sales price. Those hospitals are currently receiving the average price plus 6%. Hospitals vigorously defend the program as necessary for safety net hospitals, but drug companies have criticized its growth and argued some hospitals are not good stewards of the program.
The CMS is making the 340B changes to reduce out-of-pocket costs and improve patient-provider relations. There have also been concerns about a lack of regulatory oversight of the 340B program. A bill, H.R. 4710, which is promoted by the Pharmaceutical Research and Manufacturers of America, seeks to increase oversight.
The changes to the 340B program are expected to save $1.6 billion, but that will come on the backs of hospitals, which rely on the program to help cover other services and provide uncompensated care. This is especially problematic as uncompensated care costs have increased in community hospitals. The AHA recently reported uncompensated care in community hospitals increased from $35.7 billion in 2015 to $38.3 billion in 2016.
More uncompensated care, lower patient admissions and payers pushing more services to outpatient settings are causing financial problems for many hospitals. They shudder to think what may happen if they lose 340B funding. In September, Moody’s Investors Service said 340B payment cuts would hurt nonprofit hospitals’ margins. Diana Lee, a Moody’s vice president, said hospitals with “limited financial flexibility” would be the most at risk with the changes to the 340B program.